consumer federation of america fake check scams: how to protect and help the consumers you serve...
TRANSCRIPT
Consumer Federation of America
Fake Check Scams:How to Protect and Help the Consumers You Serve
2010
How Fake Check Scams Work
• Victim is convinced by fraudster to accept a realistic-looking check or money order and deposit or cash it
• Fraudster instructs the victim to wire a portion of the funds somewhere
• Funds can’t be recalled once picked up• Scam takes advantage of consumer’s ability to
access funds before counterfeit is discovered • Consumer is liable for loss, but financial institution
may lose money if consumer unable to repay• Losses generally range from $3,000 - $4,000
Types of Fake Check Scams
• Work-At-Home– Victim “hired” to process payments from U.S.
customers for a foreign company– Receives checks or money orders, sends money
to “employer” minus % as salary/commission
Or– Victim “hired” to conduct “mystery shopping”– Receives check or money order, instructed to
make a small purchase or test a money transfer
Types of Fake Check Scams• Foreign Business Offers
– Scammer claims to be business person or government official/dignitary of a foreign country
– Offers to make victim partner in lucrative business deal
– Victim receives check or money order, instructed to send money to pay legal or other fees
• Bogus Grants– Scammer claims victim selected to receive grant,
sends check or money order for part – Victim instructed to send money for processing
or other fees
Types of Fake Check Scams
• Sudden Riches– Scammer claims that victim has won lottery or
sweepstakes– Victim receives check or money order as
advance, instructed to send money for “fees” and “taxes”
• Sweetheart Scams– Fraudster poses as a romantic interest online– After rapport is built, scammer asks victim to
cash checks or money orders
Types of Fake Check Scams
• Overpayments– Scammer claims to want to buy item victim is
selling in print, online classifieds or auction – Victim receives check or money order for more
than selling price– Victim instructed to send excess funds to
someone for “shipping” or other reasons
• Rental Schemes– Concept similar to overpayments– May target hotels and inns for extended stays
Victims of Fake Check Scams
• ANYONE can be victim• A pitch to lure every type of person
– Person who is unemployed or wants to make extra money working at home
– Retiree thrilled to win sweepstakes or get grant– Someone selling a car or offering a sublet online – Business person attracted to promise of lucrative
deal– Trusting person willing to help a new “friend”
• Fake check scams are equal opportunity crime!
The Perpetrators
• Most fake check scammers located in foreign countries• Often part of large, close-knit immigrant communities• Operate in small groups or “cells”• Use similar techniques, wording in letters and emails• Use false IDs to make it harder to identify and track them • Take advantage of difficulty pursuing law enforcement actions across borders
Counterfeits are Easy to Produce
• Increased availability of resources– Print shops or software programs– Materials
• Check stock• MICR Ink
• Versatile counterfeiting options– Business or personal checks– Cashier’s Checks or Official Checks– Money Orders– Traveler’s Checks or Gift Checks
Counterfeits may be Hard to Detect
• Quality has substantially improved – it is difficult to detect counterfeits simply by looking at them
• Names of real companies or individuals often used in order to make them look legitimate
• Valid account number or routing number not sufficient to verify item
• Telephone number printed on item may be scammer’s
Verifying Checks and Money Orders
To verify authenticity, call the maker• Use phone books, directory assistance, or Internet to find valid phone number• Speak to someone in accounting department
But be aware of limitations• Verifying account exists and sufficient funds not enough if stolen account # used• Scammers may use authentic checks/money orders and counterfeit repeatedly• Maker may be reluctant to provide information because of privacy concerns
Verification Resources
Certain types of checks and money orders can be verified by contacting the issuers:
• American Express Travelers and Gift Cheques• Visa Travelers Cheques• MoneyGram money orders • Western Union money orders• Postal money orders• U.S. Treasury checks
Item Processing
Consumers Don’t Understand the Process
How long does it take a check or money orderto clear?
The teller said that the funds are available – that means that the check or money order has cleared, right?
It can take 10 days or longer for it to “clear”– but under Reg CC, the funds must be made available quickly
NO!
How Money is Sent to the Scammers
• Scammers instruct victims to cash or deposit checks, send funds via money transfer services
• Western Union, MoneyGram are largest, have the most physical locations worldwide
• Money can be sent and received through agent locations
• Cash required to send funds from agent locations, debit cards sometimes also accepted
• Credit, debit cards may be used to send funds by telephone or online
• In most cases, recipients receive funds in cash
Sending & Receiving a Money Transfer
Go to agent location, fill
out send form
Provide form, money and ID
to agent
Agent verifies ID
Agent enters send form into
system
Sender receives
receipt and copy of form
Go to agent, fill out
receive form
Payee receives money
Agent locates transfer from info on form
Agent verifies ID
Present form and ID to
agent
To
Sen
d:
To
Rec
eive
:
Western Union Transaction Process• Cash required (debit cards OK at some U.S. locations)• Amount may be limited by laws in send and pay countries• Sender ID required for amounts of $1000 or more USD,
country laws may apply• Payee must present ID for payment• ID requirements: current, government-issued photo ID• If payee does not have ID, test question may be allowed
for transactions under certain $ limits depending on country law where payment is received and WU policy
• If destination is U.S., payee can pick up at any WU location in expected pay state or adjacent state
• If sent to Canada or other country outside U.S., payee can pick up at any WU location in that country
• In some U.S. and foreign locations, money transfer control # required to pick up funds
MoneyGram Transaction Process
• Cash required• Amount may be limited by laws in send and pay
country • Sender ID required for amounts of $900 or more
USD, country laws may apply • Payee must present ID for payment• ID requirements: current drivers license, state ID,
passport, military identification and/or alien ID• If payee does not have ID, test question allowed
for transactions less than $900 USD, country laws may apply
• Payee can pick up at any MoneyGram location in destination country or state (bordering state).
Impact of Fake Check Scams
• Amount of returned item debited from victim’s account
• May cause overdraft, payments from account to bounce, fees
• Account may be frozen or closed• May result in negative report about victim to
databases for account abuses • If victim unable to cover loss, financial institution
may try other legal means to collect, but not always successful
• Some victims charged with check fraud
Responding to Consumers
• Direct contact or indirect through social service agency, financial institution, family or others
• Typical questions– Is this a scam? May not be victim yet– I lost money, can you help me?
• Speak directly to consumer if possible, get facts, determine if fake check scam
• Has consumer already sent the money?
If consumer has not sent money:
• Explain basics of how fake check scams work
• Refer to www.fakechecks.org, provide educational materials
• If check or money order already deposited or cashed, provide advice on dealing with situation
• Complaint can provide victim with needed documentation
Responding to Consumers
If consumer has sent money:
• Suggest they contact money transfer service immediately
• If you take complaint, explain what to expect
• Encourage consumer to be on lookout for similar scams, warn others
• Suggest consumer provide documentation to financial institution, ask to file fraud affidavit
Responding to Consumers
Other places to refer consumers:• Local postal inspector if check or money order sent by mail•Private courier if check or money order delivered by courier. • Complaint form for National Consumers League’s Fraud Center• Federal Trade Commission• Internet Crime Complaint Center if solicitation made online• PhoneBusters if money sent to Canada• State Attorney General’s office, other state and local agencies as appropriate
Responding to Consumers
Resources for Law Enforcement
• Information about registration of scam Web sites www.samspade.org
• Server IP address and location http://whoisdomaintools.com
• Information about registration of toll-free numbers [email protected]
• Help with scammers located in Canada PhoneBusters, 888-495-8501(public number) Corporal Louis Robertson [email protected] (nonpublic)
Resources for Law Enforcement
• FinCrime www.fincrime.com • FTC Consumer Sentinel https://register.consumersentinel.gov/ • Postal Inspection Service 877-876-2455
• National Consumers League’s Fraud Center www.fraud.org
• Internet Crime Complaint Center (IC3) www.ic3.gov
Western Union Record Search RequestsU.S. subpoenas
Custodian of Records
Western Union Financial Services, Inc.
20 Corporate Hills Drive
St. Charles, MO 63301
Tel: 636-866-0714
Canadian production orders and warrants
Western Union Canada
c/o Alan Aucoin, Esq.
Blake, Cassels & Graydon, LLP
199 Bay Street, Suite 2800
Commerce Court West
Toronto, Ontario M5L 1A9 Canada
Tel: 416-863-2635
International requests
Must be submitted through Network Agent(s)
MoneyGram Subpoena Contact Information
U.S. subpoenasMail original subpoena to: MoneyGram International, Inc.Attn: Custodian of Records1550 Utica Ave South M.S. GO2-1508Minneapolis, MN 55416
Faxes to 763-549-7349 permitted, but original subpoena muststill be mailed to address above
Information will not be released until original subpoenareceived
MoneyGram Subpoena Contact Information
UK requests
May be sent via email to:
or fax to (44) 207-089-5414
Other international requests (other countries outside U.S.)
Same address or fax number as for U.S. requests or by
email to [email protected]
Only UK and other international requests allowed via fax or
email without required mailed or hand delivered copy
Include fake check scams in:• Presentations to consumers, businesses• Public service announcements, press interviews• Neighborhood alert systems, other communication channels in community
Partner with banks, credit unions, check cashing services
• OH AG’s office supplies fake check flyers to banks, credit unions in state• Tellers hand to consumers when they make deposits, withdrawals over certain amount
Educate your Community
Educate Businesses
• Warn business customers that names may be used by fraudsters
• Recommend services such as positive pay • Enlist businesses to help educate consumers in
community• Partner in joint consumer education projects,
programs• Educate businesses about risks of cashing checks
and money orders, how to verify
Educational Resources
Consumer Federation of Americawww.consumerfed.org/other/FakeCheckScams.asp
National Consumers Leaguewww.fakechecks.org
PhoneBusterswww.phonebusters.com/english/index.html
FBI Fraud Alerthttp://columbia.fbi.gov/fraudletter.htm
Fraud Alert: Fake Check ScamsAmerican Bankers Association/NCL brochurewww.bankstuffers.com/brochures.php
Giving the Bounce to Counterfeit Check ScamsFederal Trade Commissionwww.ftc.gov/bcp/edu/pubs/consumer/credit/cre40.shtm Don’t be the Victim of a Fake Check Scam!Postal Inspection Servicewww.usps.com/cpim/ftp/notices/not174.pdf
Educational Resources